This season features conversations with key decision-makers who have shaped the evolution of today's leading technology platforms and ecosystems. We talk to C-suite executives, board members, investors, and others who have been instrumental in driving platform transformation at scale.
In this episode, Avanish and Andrew discuss:
About Avanish Sahai:
Avanish Sahai is a Tidemark Fellow and served as a Board Member of Hubspot from 2018 to 2023; he currently serves on the boards of Birdie.ai, Flywl.com and Meta.com.br as well as a few non-profits end educational boards. Previously, Avanish served as the vice president, ISV and Apps partner ecosystem of Google from 2019 until 2021. From 2016 to 2019, he served as the global vice president, ISV and Technology alliances at ServiceNow. From 2014 to 2015, he was the senior vice president and chief product officer at Demandbase. Prior to Demandbase, Avanish built and led the Appexchange platform ecosystem team at Salesforce, and was an executive at Oracle and McKinsey & Company, as well as various early-to-mid stage startups in Silicon Valley.
About Andrew Casey:
Andrew Casey is Chief Financial Officer at Amplitude, where he leads Amplitude's General & Administrative organization, which includes finance, accounting, and legal. With more than 25 years of enterprise software experience, Casey brings deep financial expertise combined with extensive go-to-market strategy and business operations experience.
Casey joined Amplitude from Lacework, where he served as CFO and oversaw its successful acquisition by Fortinet. Prior to that, he was the CFO of WalkMe, where he led its Initial Public Offering (IPO) and transformed its enterprise sales motion. Casey’s career also includes senior finance roles with ServiceNow, Hewlett-Packard, NortonLifeLock Inc. (formerly Symantec), Oracle, and Sun Microsystems.
About Tidemark
Tidemark is a venture capital firm, foundation, and community built to serve category-leading technology companies as they scale. Tidemark was founded in 2021 by David Yuan, who has been investing, advising, and building technology companies for over 20 years. Learn more at www.tidemarkcap.com.
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00:00 Avanish: Welcome to another edition of The Platform Journey. Delighted to have another absolutely outstanding guest today, Andrew Casey, chief financial officer of Amplitude, and similarly in other roles. Andrew, welcome to The Platform Journey.
00:16 Andrew: Avanish, thank you very much for having me on.
00:21 Avanish: Well, we’ve known each other for a while. And you’ve been in some pretty amazing high-growth companies. But you’re the ultimate business CFO. So talk a bit about your background, your personal trajectory, and then we’ll get into the meat of it.
00:39 Andrew: That sounds good. So I would call myself an operational CFO. I didn’t come up through investment banking or the traditional audit firm path, although I do have my accounting credential. But I started my career really working in the business and learning aspects of how a business works.
00:58 And probably the foundations of that came through my Sun Microsystems days where I started in manufacturing finance and understanding all the cost of goods. And then moved to an investor relations. And then did field finance. And then did corporate finance. And spent some time in our business units with marketing and with the development organization. So really learning the ins and outs of how Sun Microsystems worked.
01:22 And I thought it was a great education. It gave you perspective about how the business worked. It built your business acumen. I learned how to influence and negotiate by going through those different areas. And it just made me a better business operator. And I’ve used that to this day as I’ve moved into the CFO role.
01:44 And although I can do the accounting and reporting, and I get involved with all the technical things that you can imagine that a CFO does, I spend a lot of my time working with business leaders, talking with customers, helping us to propel our strategic objectives. And I find that that’s been the competitive advantage for me in the marketplace.
02:06 Avanish: You’re one of the best at that, Andrew, and I think it’s a sign of someone who really understands all the different pieces, that you came up the hardware stack, and those of us in software often forget how hard that is and how critical that is, right? So thanks for sharing that.
02:24 Now you’ve been at some high-growth companies, like WalkMe and Amplitude. Talk a bit about who are they, what have they done, and how did you get into this – as you think about the business – how do you think about platforms and ecosystems, and why did that matter in those places?
02:43 Andrew: Yeah. So I think we can go back a little further, Avanish, to the days when you and I were working together at ServiceNow. And I would tell you that that probably was the foundation for me, in building and scaling a business in a real way.
02:56 Before that, I had been at much larger companies, like we talked about, Sun, Oracle, Semantec, HP. And when I moved into ServiceNow, it was the first time I had gone to a company that had less than 2,000 employees. It was around 400 million in ARR at the time. But a lot of processes and systems were not well architected. And they certainly weren’t enabled for scale.
03:16 And so, as we built the business at ServiceNow from that 400 million to well over 4.5 billion, there was a lot of things that we had to go build. And when Mike Scarpelli and Frank Slootman left and went and formed Snowflake, I had the opportunity to interview for the CFO job. And if I had been offered the job, I would have stayed, for sure. But unfortunately the board really wanted somebody who had already been a CFO.
03:40 So I competed hard, because actually John Donahoe, at the time, actually asked me to participate and said, “Compete like hell!” But this is your challenge. The board wants somebody who’s already been a CFO. And as we got through the process, certainly they selected Gina. And Gina is a great CFO. But the reason was because I hadn’t been one.
04:01 Now, John and Bill, who had been coming on at that time, asked me to stay around. Because I knew the business really well, the board respected me. But the reality was, that whole process convinced me I wanted to be a CFO. And so, although they asked me to stick around, I told them I couldn’t. And that’s because, even if Gina decided at some point she wanted to retire, by their criteria, I still wouldn’t be qualified.
04:24 So I had to go, leave, and become a CFO. And it was quite serendipitous, around that time WalkMe was looking for a CFO to help them scale the business and go public. And I knew about WalkMe. We were a customer at ServiceNow. We had implemented a lot of business process automations through WalkMe. And for those people who don’t know, it’s really an in-application learning platform through which you can actually drive business process automations by understanding how people are interacting with those applications.
04:57 And this spoke volumes to me about how to drive and implement digital transformations at a time when most enterprises were thinking about how they automate more and more business practices through software. And so we saw this explosion of different software applications that were happening, especially as we moved into Covid.
05:14 And the story was, I joined WalkMe on March 2, 2020.
05:21 Avanish: Ooh. I don’t think I knew that.
05:23 Andrew: And a couple weeks later, we were obviously shutting down, trying to figure out how we’d run remotely. And [Laughs] we didn’t even have a work-from-home policy. We had no real understanding of how we were going to operate remotely. And many of our customers had the same issues. But as we worked through the issues of working remotely for the first time, our business started to pick up in demand, as most companies started to realize that this is a way to continue to drive interaction with your employees and get their business processes completed.
05:54 So WalkMe was actually benefitted by Covid. Throughout the summer we had a real resurgence in enterprise business that was coming forward. I think we signed up close to 150 G2Ks over a six-month period. It was amazing.
06:09 Avanish: Holy cow. Yeah.
06:11 Andrew: By the end of that calendar year, the board was asking me to get WalkMe ready to go public. Which I’d always wanted to do. It was something that… Every CFO aspires to take on a company and, at some level, take them public. I had the opportunity. The board was a little bit misunderstanding of what was required. They asked me to do it, and they said I had two months to do it.
[Laughter]
06:33 And I told them, yeah, that’s just not going to work. [Laughs] We’re not ready for that. And I told them the immaturity of the business was still one that we had to work on. Our processes weren’t real hardened yet and didn’t scale. But be that as it may, it was the right time to raise funds. And we went out in June of 2021.
06:56 So that was about an eight-month period to get the company ready. Now, having said that, we had a great raise for WalkMe. They raised more cash than was necessary to reach our profitability goals. And it funded investment. And so it was a great time to raise. But the unfortunate thing, there was that immaturity issue on scaling and driving business processes wasn’t there. And it really hurt when more macro issues started to creep up in late ’21 and early 2022.
07:28 Now, we were working through that, and ultimately it set up the company to operate at at least a marginal level of growth, and, as you probably know, WalkMe was sold to SAP not too long ago. Now I had transitioned out of WalkMe around August of 2022. And the reason was because principals that I’d worked with before over at ServiceNow, Mike Scarpelli, David Schneider, Frank Slootman, and they all asked me to go talk to Mike Speiser over at Sutter.
07:58 Sutter was a big investor in Lacework. And they needed an operational CFO like me. Lacework had gone through a difficult time on hiring very rapidly but then seeing a deceleration in the market and demand. And then their CFO had some issues personally and they needed to step away.
08:21 So I came in, and with Jay Parikh, started to improve the business. We got it operationally sound and really focused on driving growth. We were making great progress. One of the things that happens in the Valley when you make great progress, you start to draw the ire of big strategics who like what you’re doing and would love to have those assets under their umbrella. And ultimately that drove a process under which we sold Lacework to Fortinet.
08:46 Now, the funny story I will tell you – and this is one that my wife often pokes me, given that she’s a CFO as well – is that I signed the definitive agreement to sell Lacework to Fortinet on August 1, 2024. And that was around noon. At 2 p.m., I became the CFO of Amplitude. [Laughs] On August 1st. So I like to tell people I had a two-hour break.
09:13 Avanish: Two-hour break. [Laughs] Not even a weekend.
[Laughter]
09:17 That’s awesome.
09:17 Andrew: And the reason was, Amplitude was… Because Lacework’s acquisition was fairly public knowledge that it was going on, I had started interviewing different companies. And Amplitude did not have a CFO at the time and really wanted to before their next earnings. And their earnings was the following week. So explained Amplitude, so they could get the notice out that they’d hired a CFO. [Laughs]
09:41 Avanish: Love it. So, Andrew, one of the things about you that, again, you said operational CFO, I call it a business CFO, I think we’re saying very similar things.
09:49 Andrew: Yeah. Very similar.
09:51 Avanish: You’ve got a very keen pulse on the business. And I think you think about scale. You think about scaling profitably and scaling in ways that are nonlinear, and so on. And again, having worked closely with you at ServiceNow, and seeing you in action, I think you brought that same mindset. For example, to WalkMe, you hired some of my old team there. You connected some of my old team there to help with the same process. I think you’re doing the same thing at Amplitude.
10:21 What goes through your mind? When you think about being both a C-level leader but also a key advisor to the CEO and the board, how do you think about that process of, hey, we need to think ecosystem. We need to think partnerships. We need to think things that may not have been part of our arsenal prior.
10:46 Andrew: There’s two things that come to mind. I have a phrase I tell my team and others, that we have to play chess, not checkers. And when you think about it, when you play chess, you’re thinking about several moves ahead. You’re thinking about how you’re going to move, and you’re anticipating how your opponent’s going to move, and then how you’ll move from that.
11:04 You’re actually trying to think about the implications of decisions you’re making in that game. And I think a lot of business decisions are that way too. You have to understand the implications of the decisions you make. And then what are you going to do when the invariable repercussions from those decisions come about.
11:22 And it helps to clarify the right steps and strategy. Because I think the role of the CFO, especially for the companies that I’ve been in that are looking to build out a business and scale and drive tremendous growth, it’s one in which you have to make investment pivots based upon the strategies and the steps that you’re anticipating are going to occur over a period of time.
11:50 And I can point out lots of different times at ServiceNow or WalkMe, or Lacework, or even now at Amplitude, when you’re making adjustments in your strategy, that the CFO plays a really critical role in making sure that you’re getting the right framework set up. That you’re anticipating the right steps that need to happen in your systems and your processes and your reporting. How you’re changing your comp design, how you’re changing your territory design, your opportunity funnels, your partner ecosystem.
12:20 Those things all are about the business. But the CFO has got to lean in and empower and align the organization around the achievement of those objectives.
12:34 Avanish: Yeah. And I think, if I could just add to that, if any one of those pillars doesn’t fall into place, the broader goals are either much harder or maybe even impossible to achieve.
12:47 Andrew: Right.
12:47 Avanish: They have to work in sync. And you talked about incentives and compensation. To me, that’s been one of the biggest lessons I’ve learned in 15 years of doing this. If you don’t get that right, you’re not going to drive the right behavior.
13:01 Andrew: You know, it’s so funny you should mention that, too. I had this discussion when I first arrived at Amplitude when I sat down with the CRO and the president. I said, let’s first talk about the strategic objectives you want to achieve over the next year and then the following four years. What do we want to do? What do we anticipate?
13:21 Because the way in which we’ll design our comp plan will be one that incents the behaviors and actions for us to achieve those outcomes. And a lot of times what people do is they reverse that. They want to go start with the design rather than understanding what the design is going to lead to.
13:38 Avanish: Yeah. And at the end of the day, it’s about people, right? And it’s about people and behavior. So let’s dive a bit into the ecosystem side. Again, you’ve been, I think, a strong proponent. You’ve been a huge supporter. What are the signals you look for to say, hey, this is the time. Yes, those are the strategic objectives of the company, these are the growth targets, this is how the street is perceiving us, and so on. But what are the signals, from maybe an internal ratings perspective?
14:05 You say, you know, this is the right time, and things are in place. Or not. To take that step of action.
14:13 Andrew: There’s a number of things that come to mind. But maybe first I would go back, even back to my Sun days. Bill Joy was somebody that I admired quite a bit. He was just brilliant. And one of the times I had him talk to investors, he was talking about how the world has a bevy of really, really intelligent people that can help you solve a problem. Because they take different perspectives on things.
14:38 So you can never hope to hire all those brilliant people. You’ve got to figure out how to tap into those capabilities to really take any idea you have and make it the best. That stuck with me for a long, long time. It still does, I should say. And it patterns how you go about solving real problems that come up. Whether those are problems of how you drive growth or whether those are problems that you have with design.
15:03 And when it comes to partner ecosystems, the thing that I would tell you is that the more that you can influence others that what you’re developing is just a masterpiece – whatever you’re doing – then the more you’re going to get lift out of that. And that comes in the face, for an enterprise software company, that comes with a product that adds really value to your clients, and then extending the reach of your capabilities by having partners believe that and execute on that same objective.
15:34 And I will tell you that there was a session you did with Kevin Haverty not too long ago, and I think something he said was really very, very much the case with ServiceNow. We had a product, at that point in time, that people loved. Our customers loved. And they started doing something wonderful. They started building out their own workflows. They started building out their own use cases.
15:59 And when that happened, it started to broaden out the number of people who could influence the future success of the products and the platform. And that came through partners as well. And so that’s an early sign.
16:13 Back to your question earlier, what’s an early sign? Well, an early sign is, do you have a product that actually has those capabilities? Do you see the organic nature with which customers are using that product, and they’re creating new value propositions that maybe you didn’t even conceive of when you started?
16:29 And I would tell you it’s something I look for today, when I was trying to figure out which company I wanted to go to post Lacework. And Amplitude has that. Because we’re starting to see use cases with customers we never anticipated. You think of Amplitude as an analytics platform. But people are using the analytics platform to go drive better marketing outcomes, or doing loyalty programs, or doing onboarding. They’re doing, how do I better interface with my customers digitally, in ways that we never anticipated.
16:57 And that creates this opportunity for then us to go showcase that to partners who can build those use cases at scale. So maybe we found a healthcare customer that’s doing really great work with their own homegrown implementation of Amplitude for their emergency room engagement with clients. And they’re delivering better emergency room services because they’re analyzing the data and feedback that’s going on there. Well, that’s a great use case for a partner to go develop for every other hospital that’s trying to achieve the very same outcome.
17:33 Avanish: I just love that. I mean, here you’re a CFO, but you’re telling a story of an actual use case in a very specific industry that leverages your platform. I mean, that is exactly the beauty of it, right? Finding those sometimes diamonds in the rough, sometimes it’s a pattern you see two or three times, and saying, look, this is an expertise that we probably don’t have in house. We may not need to have it in house because the ecosystem can perhaps do it faster, do it better, do it at more scale, etc.
18:03 Andrew: And I think that just more, even at a less specific level, what we started to see at Amplitude was that people, new companies, were actually sprouting up and building real revenue streams with applications that were surrounding the analytics platform. Whether you think that is a session replay or web experimentation or guides and surveys. All these were applications that had built around a core analytics environment that Amplitude helped create.
18:33 And it then provided a roadmap for us to start building out what we now consider our platform.
18:38 Avanish: Yeah. So you talked about the product. I think one of the things you and I probably would agree on is also the team that is around – you mentioned alignment earlier. Talk a bit about what you look for in the team. Because, again, it’s a mindset. Not everybody has it or is born with it. So sometimes you have to find it. Sometimes you have to hire it. Sometimes you have to grow it. Talk a bit about the team and the team expectations, broadly, that you need.
19:05 Andrew: So I will tell you, when I first was looking at different companies to join, team was a big part of it. I felt that, at both Lacework and at WalkMe, there were gaps in that executive leadership team. And those gaps created an inability to actually achieve the overall objectives that the business had. And that’s really hard to get the right team together, those components together, that work really, really well together.
19:34 At ServiceNow, we had Mike, and we had Dave, and we had Frank, and we had a whole bunch of the executive team that just worked really, really well together. Very well aligned. And so when I came to Amplitude, I assessed each one of the execs and how they were contributing and working together as a team. And it’s one of the things that really attracted me to it.
19:54 Thomas Hansen, who is our president and COO, was the one who recruited me into Amplitude and to go talk to Spenser, our CEO. And I was thinking at the time, the CFO/CEO relationship has to be really rock solid. You have to be on the same page. And you really can’t have ambivalence in that relationship. And Spenser thought the same way. But having Thomas, the leader of the go-to-market team, recruit me in because he wanted a strategic partner in the office of the CFO was a big influencer as well.
20:30 So you have to get that really strong dynamic, that culture alignment. It’s got to be there, or a lot of things break down, as you mentioned. I think there’s also a bit that you have to influence the culture. I told the executive team when I first arrived here, you earn the culture we have. And if we want a culture that’s different, then we have to earn our way through it.
20:56 And some of that means making changes to how we operate. And some of that means making changes to people we have on the team. Because sometimes people have great intentions, and they may understand exactly what the problem is that you want to go solve, but maybe they don’t have the understanding of how to solve it.
21:14 Avanish: They may have never done it before.
21:15 Andrew: They may have never done it before.
21:16 Avanish: They have not seen the movie before, right? Yeah.
21:18 Andrew: And I use a phrase I told the board when I first started. You know, my team does a lot of admiring the problem, as opposed to figuring out how to solve the problem. [Laughs] And I think that that comes with a little bit of inexperience. And we had a very inexperienced team when I first arrived.
21:39 Now that’s changed. That doesn’t mean you have to have wholesale replacement of everybody within the organization. But the more you can influence a good veteran in a group – you bring in veterans with your rookies – you get a better team dynamic. You know, you see this in professional sports all the time, where you see the strong veteran. Like with Curry and you’ve got a few others that have come on the Warriors team. They’ve got a good mix of veterans and rookies that really drive great team chemistry.
22:10 Well, I think that’s what we had to do as well. And as you do that effectively, and you get everybody aligned on the things that are really important, then you start to find that you get scale. You get a very focused organization that does better and better at the execution.
22:29 You know, Frank used to say, look, I don’t want you to give me five things. I want you to give me one thing. What one thing are you going to do? And I’d say, one of the things the CFO very, very much has to accomplish, and with a smaller company that’s trying to grow, is to drive alignment and focus around the investment areas that you’re going to make.
22:50 You just don’t have the resources to invest in everything and spread yourself very thin. You have to be focused and execute on the things that really matter.
22:58 Avanish: Yeah. Again, brilliant advice. Diving into the platform and ecosystem, I often, frankly, use those terms somewhat interchangeably. The platform is the technology side, the ecosystem, unless someone is extending/building/integrating, you don’t really have a platform. I mean, you could have it for your own sake, but if no third party validates that… How do you look at that, and how do you think about, again, to the point you just made about the investment strategy… One of the things we often see, companies will put it on their website: We’re a platform for XYZ. Then you look under the covers. Hmm. It’s not quite that. It’s a fun thing to say.
23:42 But how do you think about it, and how do you look to your peers in product and marketing and sales, etc., and say, you know what? This is an investment that’s worth making. And, by the way, it’s a long-term play. It’s not something you do overnight. And in order to do that, yes, I’m willing to work with you all to figure out the funding model, the resource model, the reallocation model perhaps, to do that.
24:06 Andrew: And I think you even have to overcome some misperceptions on what that journey really is. Because what I’ve found in the three companies that I’ve been at, they had at least endeavored to go create that journey to a platform, the reality is you often start from a single product and capability. And you have a lot of resistance to moving away from what had worked and gotten you to a certain level.
24:30 So you have to almost break down some of those things in order to really take next steps forward. We talked a little bit about the product. The product has got to be something that engenders that ability to go create an ecosystem. Something that other people are willing to invest in because they believe they can make money on it. And that they can establish their own businesses.
24:53 So that comes from a little bit of, hey, does the technology lend itself to it. I think that it’s also this notion of you have to have strategies that attract the right technology partners. Because in a complex enterprise ecosystem of technologies, there’s no one tech platform that drives everything that a company uses to operate.
25:13 And so, whether you think of that in terms of customer service or some aspect of sales automation or marketing, there are vendors out there that you’re going to want to partner with to really drive the right outcomes for the use cases that are important to your clients. And so, for us, it’s Braze, and it’s HubSpot, and it’s Klaviyo, and others. Because we’re very much focused on how we drive the right solutions for people who are looking for marketing.
25:38 And ServiceNow had its own, and WalkMe had its own, and Lacework had its own. So that’s the first step. I think, after that, then you start to work on how do you get the evangelical process started where people look at those capabilities and then they can start building their own solutions around it.
25:55 And a lot of times what I’ve found is that smaller companies tend to give away the services that are associated with developing those capabilities. Under the auspices that they’re trying to do and deliver a better customer experience. And that may be the case. But the reality is that no partner – value-added reseller or smaller – is going to invest in building their own practice, their own capabilities, if they think that there’s, one, no business, because you’re giving it away for free. They don’t want to compete with free. They want to understand that customers are valuing the solution that they’re going to deliver. And they can charge a reasonable fee for it.
26:30 So, very classically, when I first joined Amplitude, we were charging nothing for services. And now we’re charging a rate, actually, which is much higher than what third parties would provide. And the reason is because I want to give an umbrella under which those partners can go develop a business that they can get a reasonable level of return.
26:49 And suddenly that sets the dynamic with partners. Oh, wait a minute, are you saying that you’re going to help me build a business around this? Well, yes. Because we know that we can’t reach every customer. And we know that we can’t be an expert in what every customer wants to do with our platform and how they want to use it to drive the right outcomes. But what we do know is that you can be on the front end of that, developing and leading areas where we had never even anticipated.
27:20 And so, that’s kind of the next step. I equate it to when we were at ServiceNow, Avanish, when there were companies like Cloud Sherpas and Linium. And nobody had ever heard of them. They were smaller, value-added resellers who built their business around driving service desk automation. And that led then to a managed services business creation that was a whole new area of an evolution of the outsourcing business.
27:45 Avanish: Didn’t exist before.
27:45 Andrew: Didn’t exist. And then, as those businesses got bigger and better, what you found was the global systems integrators started to say, hey, this is something we need to get involved in. Because we don’t want to miss out on a major trend. And so many of those smaller companies got gobbled up by the global systems integrators because they wanted to have immediate capabilities brought into their organizations to go deliver those types of service.
28:08 So for us at ServiceNow, that happened over a four-year period. And I love to tell people that. When we first joined, we had like 2% of our revenue coming from partner-sourced opportunities. But by the time I left, it was more like 45%, 50% of the…
28:24 Avanish: It may have been higher, actually, I think. Yeah. And one of the things, Andrew, that I always admired about you is, in those conversations, when we would sit down and figure out deal structures and so on, exactly the point you just made. We were helping these folks build a business. We would ask questions. Hey, what’s the win-win? If it’s a win-lose, if we’re keeping the margin more so than them and so on, that’s not going to be a long-term business.
28:54 Andrew: Believe it or not, I still use some of those principles, Avanish, today, when I’m describing our pricing strategy or negotiating strategy with our sales team. Our number one principle is that we’re trying to incent customer adoption of the platform, because if they’re using more of what we’re doing, we’re going to get value. The second is, what you were alluding to, you want to have a fair exchange of value.
29:15 I’ve never had a customer tell me, when I’ve had this discussion around our principles and how I approach negotiations, tell me Andrew, you know what? You’re just not entitled to your fair exchange.
[Laughter]
29:27 They’re always a little taken aback and say, “I like your thought process. Fair is good.” And I will tell you that the other principles are around flexibility of usage and transparency. And simplicity. Because enterprise customers, if you get too complex, they’re not going to want to deploy your product. And they’re not going to want to do license administration for you. They want to know that, as they get greater value through use, you’re not trying to excise tax them. You’re trying to get to that exchange where the customer has the perception that they’re getting value in advance that they’re looking for.
30:00 Avanish: Exactly. Exactly. And again, I think that’s one of the things that, when I see things not working well, usually that is – beyond the team and some of the other things we’ve talked about – that is often one of the root causes. You’re just not putting the empathy piece – put yourselves in the shoes of the partner and/or the customer, usually both. If someone doesn’t do that, then chances are you’re not going to make it work.
30:28 Let’s switch a little bit of gears, but again, you were sort of going down this path, metrics. As a CFO, how do you know, what are the signs you look for, is this working? Is this not working? Is it something I want to help scale? Is it like, whoa, whoa, whoa, we’re going down the wrong path? What do you look for?
30:52 Andrew: So the first thing I usually do, and I have done this the last couple times, so I will talk to the FP&A leader that would be ostensibly working for me, and I ask them, how do you define accounts? How do you define ARR? How does that align to the comp plan structure, and how are sales measured?
31:11 And one of the things I found when I came to Amplitude was, the more people I asked, the different ways in which things were defined. And immediately understood that there was some alignment needed to happen…
31:21 Avanish: Some dissonance?
31:21 Andrew: [Laughs] On how we were reporting externally, for how we were running internally. And fortunately, at Amplitude, when I joined, I had done my diligence on the accounting. There was nothing wrong with the accounting. The accounting was fine. But the interesting aspect was, it was very similar to both Lacework and WalkMe before. It was built up during Covid.
31:45 And so what you found was a lot of siloed operational structures and reporting. And people defining their own metrics and their own objectives for the planning period. And that not well aligning to other business processes or the longer-term financial and strategic objectives we had.
32:05 So when you have that difference in definition, the first thing that I do is start aligning and defining what exactly we’re going to be doing from an external perspective. And for me, in particular, I take a relatively conservative view on how we define our metrics. And it’s because I want to be as transparent as I can, to not just employees and our board and customers, but also with our shareholders.
32:32 In many cases, shareholders who are investing in an enterprise SaaS application business like us, they want to understand that the annual recurring revenue that you’re booking actually is going to be reflected in revenue. In the 12 months that follow. [Laughs] Annual translates to 12 months later I’m expecting this to do…
32:54 So there should be some very strict rules around what you define. And we don’t do things, like if there was a monthly contract, there’s no commitment. We’re not going to annualize that.
33:07 Avanish: Because you don’t know.
33:07 Andrew: Because the relative churn associated with those types of contracts is so high. And so if I was going to report a customer who came in at $10,000 per month as $120,000 of ARR, if they churn the next month, then I have churn of $120,000. And really never realize the benefit of that contract.
33:27 So you redefine your metrics. You make sure that you’re consistent with what investors expect and that you’re reporting. That then translates into how you’re going to drive behavioral focus from sales and what we’re going to sell, how you’re going to drive incentives around that, and certainly how you focus your customer segmentation and the areas you’re investing to book those things.
33:48 So metrics really, really matter. And I tend to define most of our internal metrics very much in line with standards that are reported out, like a SaaS metrics board and others, that have a consistent comparability. Because that’s the other thing investors want. They want to understand, when you call net dollar retention, what does that really mean? Well, it’s comparable, by definition. And if you have gross retention, what does that really mean? Well, it's comparable.
34:12 And so there are a number of different SaaS metrics that we’ve used and deployed and redefined, in some cases, to be very consistent with that comparability measure.
34:23 Avanish: So taking that to the partners, how do you bring that to the partner level as well? And what are the signals you’re looking for that the investment in the partner ecosystem is actually delivering that nonlinear growth, or that expansion of the TAM, and so on?
34:39 Andrew: So there’s a couple different areas. Partners come from both, I’ll call it delivery aspects, for us, because they’ll do delivery, and then there is more of the sales and opportunity-generation side. So when we focus on the service delivery side, it’s really around classic what is your variable hours of service? We do time and materials. We do completed contract type structures. And so those are very simple, but it gets back to, hey, we want to make sure we’re talking apples to apples on rates so that we can best give you the incentive to invest and make sure that customers see you as an alternative to what Amplitude would have to do, and at a lower cost in our strategy.
35:22 Now on the sourcing side, it always comes back to, for me, having a registration process at scale and then the right incentive structures internally between your internal sales and external sales. Because invariably what happens when you have a direct sales force and you start opening up incentives for a partner structure, you have some conflict in how you navigate that.
35:46 Now if you have a very classic partner registration process, like we do, what happens is the partner will come in through a portal. They’ll register an opportunity. And then you’ve got to make sure that that opportunity compares to what your pipeline looks like. And if there’s an existing opportunity out there, have a framework under which you determine whether you decline that or whether you accept it, and then a duration under which that opportunity is going to continue to be listed as a source from a partner.
36:14 Now we give incentives around that for the partner’s team, so they’re incented to go bring forward opportunities that they believe they can close and win. And what I’ve had in my history, if you do this correctly, you actually get a much higher conversion rate associated with partner registration than you do with your own internal sales processes, once they’re registered.
36:33 Because they don’t want to go through a process of registration unless they’ve qualified it themselves.
36:38 Avanish: If they have a high… Yeah, with high confidence.
36:40 Andrew: And so if we do those things right, what happens is, through your CRM system, if you run your opportunity funnel right and your partner registration right, you get a bevy of partner-sourced revenue that’s coming through. Partner-sourced ARR, which turns into revenue. And that’s a way to really look at how well the investments you’re making in your partner investments, whether those are training or direct coverage on the partners themselves, the technical resources that are there to help the partners to make sure they’re delivering the right level of resources, if you get that partner-sourced ARR and revenue coming through, then that’s the easiest way to see you’re getting a return on it.
37:20 Avanish: That it’s worth it, right. Fair enough.
37:23 Andrew: And then, as I mentioned, internally you’ve got to go address the conflict areas and make sure that the sales leadership understands the benefits associated with developing a partner ecosystem that is vibrant and that they’re generating a return from their levels of investment. And to make sure that the incentives from the sales rep side are ones that, I won’t say completely ambivalent to the source, but one that they understand that it can accelerate their capability to attain.
37:58 Avanish: Yeah. That’s absolutely a fair point. Anyway, as we wrap up, I know a lot of your fellow CFOs are in boardrooms and in C-suites having similar conversations. Hey, are we a platform? Are we not a platform? How do we scale faster? One of the things I only half joke about is, often it’s the, you know, we brought someone in. We tried it for six months. It didn’t work, so it doesn’t work for us.
38:24 What advice, what counsel do you give to someone like that? And how can they help their peer group or their colleagues think about this in the very structured way that you just described?
38:38 Andrew: Well, I will tell you, without sounding too supportive of you, I actually use the podcast that you did on defining a platform in this very conversation. And it’s because it was so correct. About how you think about the platform journey and what’s really required.
39:02 It’s easy to say, from a technology and a product perspective, yeah, we have a platform. We have multiple things that we can do. But that’s not enough. It’s really not sufficient. You may have aspirations to do that, but that’s more of a multi-product strategy, rather than a single-product strategy. That’s not a platform strategy.
39:20 The other thing you have to understand is how customers are demanding your set of products. For Amplitude, in particular, we had three or four products and we started thinking, hey, we might have a platform here. And the first thing I asked was how many of those products get sold independently. And the reality was, not many. And that’s why we started calling ourselves a platform. Because we realized that, no, there is a definite customer journey associated with the adoption of Amplitude.
39:48 People start with analytics.
39:51 Avanish: And a sequence.
39:52 Andrew: And then they start adding these other capabilities and other personas. And they see multiplicative value across those personas. And then you can start saying, wait, the product is actually set up to go drive a better customer experience the more you add. So it’s a better-together story. Remember that?
40:09 Avanish: Love it. [Laughs]
40:09 Andrew: A better-together story that you’ve got with all your different products. So that’s the first part.
40:17 The other, as we talked about earlier, is the ability for customers to actually innovate on your platform, creating their own use cases and outcomes. In many cases, things that you didn’t anticipate when you built the product and the corresponding other sets of products that work on your core.
40:33 The analogy for me was, at ServiceNow, we had ITSM, and then we built out different capabilities around the CMDB and the ITSM. Amplitude is the same way. Analytics is the core, and we built out these other products.
40:48 But the customers using it and partners starting to pick that up and building their own solutions, that’s another major step. Then I think it’s how you are representing your platform to the market. And we’re still going through this, to be frank. And that’s how are you representing to clients the value proposition of adoption of your platform? And that comes through your pricing and packaging.
41:12 Avanish: Exactly. Pricing, packaging, and positioning, right? Yeah.
41:15 Andrew: Yeah. And I will tell you, we had executive-level conversations about the need, if we wanted to be a platform company – and everything suggested, from customer and partner feedback, that we should, and that’s a strategy we should execute – that we needed to have a pricing and packaging that amplified it. No pun intended.
[Laughter]
41:43 Avanish: Andrew, what a pleasure. First of all, thank you for those very kind words. It means a lot. And that is the objective of this series, really, to bring those lessons all of us have learned along the way and say, hey, if you truly feel this is an objective, then here are some of the things you really have to think about to get it right.
42:05 Thank you, Andrew Casey, CFO of Amplitude. Really delighted to have you on this leg of The Platform Journey.
42:10 Andrew: It was a pleasure, Avanish. Take care.
42:12 Avanish:Thank you.